Mathematics and Informatics ICTAMI 2005 - Alba Iulia, Romania
QUANTITATIVE ASPECTS OF THE ECONOMIC GROWTH
Sorin Briciu, Ionela Gavrila-Paven
Abstract. In this study we want to make a particular study regarding the economic growth and its evolution in our economy. The economic growth is not just the result of the macroeconomic dynamic, but of the demographic dynamic as well, determined by the biological and social factors. The economic growth has to be regarded, as a dominant tendency in the frame of a long period of time and it must not be mixed up with the conjectural expansion on short term.
Economic growth is a complex process, which is aiming the economic sys-tem as a whole unit and its dynamics. The economic growth theory is being the centre of the present preoccupations, especially in the transition country.
The economic growth can be defined as the expression of those modifica-tions that take place in a certain space, regarding the increase of the macroe-conomic results’ dimensions, and strongly correlated with the main factors.
The economic growth is not just the result of the macroeconomic dynamic, but of the demographic dynamic as well, determined by the biological and social factors.
The economic growth has to be regarded as a dominant tendency in the frame of a long period of time and it must not be mixed up with the conjectural expansion on short term.
Regarded from the quantitative point of view, the economic growth can be surprised through the internal gross product’s evolution, for example in real measure (adjusted with the dimension of the deflation).
The gross internal product synthetic frequently used for evaluate the dif-ferent stages of one country’s economic force.
The available offer of labour is appreciated generally through the active population. According to the Labour International Bureau, the active popu-lation represents the segments of one country’s popupopu-lation that includes the persons over 14 years old, which are occupied at least one hour per week, in-cluding the persons that temporary are on holyday, as well as the persons that are unemployed.
In time, the active population is being modified as a result of the influence of more factors:
o The evolution of the entire population of one country (majority of the countries are facing a diminution of the birth rate);
o The immigration of the active population (increasing or decreasing the active population can be determined by the reverse of the migration fluxes, as a result of the deporting of the foreign workers that do not have legal papers);
o Increasing the school period;
o Retiring age (generally there is the tendency of increasing the active life – in Romania is desired the gradual decrease till 2010 of the retiring age at 60 for women and 65 for men).
Modifying the dimension of the active population has effects upon one phenomenon that affects many countries – unemployment. Unemployment can be generated by an increase of the active population considering a slow increase of the working places, either by a decrease of the active population in a small measure than the diminution of the gross intern product.
Is being considered that the conditions of the existence at one moment of the equilibrium on the labour market, if it appears the population increasing determined by the demographic situation, that being favouring the social flex-ibility (changing the working place depending on the measure of the salary) ad the professional mobility, and on the other hand, is slowing the substitution of the work with the capital.
If the labour (appreciated through the dimension of the active population) is not a reproducible factor, the capital is considered such a factor. Attempts of defining the capital belong to the greatest economists, among which the most suggestive belongs to R. Barre. In his vision, the capital represents “an ensemble of the economic resources heterogenic and reproducible, which through an indirect using allow the periodical obtaining of an income.”
consump-tion goods meant for the employers involved in producing those economic prod-ucts;
o Reproducible character – capital is formed from goods which are produc-ing and reproducproduc-ing systematically and not from the resources with permanent character, irreproducible;
o Capital goods are designated for an indirect use, not for direct satisfaction of consumption needs;
o Capital goods assure the systematic and periodical obtaining of an income (gross internal product at the national level).
The last characteristic is very important because in the absence of produc-ing one income, the resources from above are not becomproduc-ing existproduc-ing shape of the capital.
The functional dependence between the technical capacities and the human resources from one country, on one hand, and the real nation production, on the other hand, can be illustrated with the help of the production functions, which in a general shape are the following:
Y(t) = F[K(t), L(t)]
This function of production can take various forms, among which the most frequently used is the Cobb-Douglas function:
Y(t) = A·K(t)α·L(t)β where:
Y is the real production of the nation; L is the active population of the country; K is the capital stock of one country;
α is the varying coefficient of the production depending on the capital modification;
β is the varying coefficient of the production depending on the labour modification;
A is the technical progess.
The hypotheses that are the base for this function are the following: o The production is depending on the two factors exclusively;
o The scale efficiencies are constant;
o Capital and labour are perfectly substitutable; o α+β = 1;
o If the factors are remunerated at the marginal productivity’s level, then 3b1 and 3b2 are equal with the proportions that the production factors have in the total product.
For the Cobb-Douglas function we are having the following data:
GIP L K
5809 6125 320.2 6293 6252 341.4 6012 6127 332.5 6384 5946 318.0 6241 5862 328.1 6761 5952 351.2 7047 5938 363.4 6771 5784 349.7 6520 5664 368.5 7035 5850 377.2 7120 5845 380.9 7200 5703 366.2 7111 5525 379.9 7380 5511 384.2 7150 5399 383.0 7400 5150 385.9
The relation between production, capital and labour can be shown graphi-cally with the help of the multiple linear correlation coefficients, as it follows:
R2 = aˆT(X−X′)T(Y −Y′)
(X−X′)T(Y −Y′) where:
ˆ
a – is the metrics for the estimated parameters; X – is the metrics of the exogenous variables; Y – is the metrics of the endogenous variables. In this case for our population R2 = 0,82763.
Figure 1: The correlation between production’s volume and labour resource
[image:5.612.104.519.307.417.2]Nr. z x T 1 8.667164 5.768946 8.720134 2 8.747193 5.833055 8.740657 3 8.701513 5.806640 8.720461 4 8.761550 5.762051 8.690474 5 8.738896 5.793318 8.676246 6 8.818926 5.861356 8.691483 7 8.860357 5.895504 8.689128 8 8.820404 5.857076 8.662851 9 8.782630 5.909441 8.641886 10 8.858653 5.932776 8.674197 11 8.870663 5.942537 8.673342 12 8.881836 5.903180 8.648748 13 8.869398 5.939908 8.617039 14 8.906529 5.951163 8.614501 15 8.874868 5.948035 8.593969 16 8.909235 5.955578 8.546752
So, in conclusion, we can affirm that the increase of the available capital in an economy determines the increase of the production in a bigger measure, and the population modification determines in a small measure and in the same sense.
References
[1] Ciucur D, Ecomonie, Economic Studies Academy’s Printing House, Bucharest, 2004.
[2] Florea I., Econometrie, Oradea University Printing House, Oradea, 2003.
[3] Romanian Statistics Yearly Report. Sorin Briciu, Ionela Gavrila-Paven
